Zhang Jingwei: How Will The Rise And Fall Of The Renminbi Stir The Global Market?

The ripple of the fluctuation of RMB is fermented worldwide. China's major trading partners, such as the US, Europe and Japan, also expressed concern about the impact of the Yuan's trend on China's economy and world trade. It can be said that the rise and fall of the renminbi triggered the global effect, no less than the impact of dollar change on the world under the quantitative easing policy.

When people simply sum up the renminbi as a rise or fall, they ignore the active market guidance of China's policy. Not long ago, the central bank [micro-blog] President Zhou Xiaochuan said that the marketization of interest rates would be completed within one to two years. In this regard, the central bank expanded the fluctuation range of the RMB against the US dollar (from 1% to 2%).

　　 Interest rate liberalization It is the goal that China must achieve. The fluctuation of RMB in long-term market is logical. It is worth mentioning that since the beginning of the reform in 2005, the RMB has appreciated by 36% against the US dollar, which gives the world a sense of inertia and believes that the appreciation of the renminbi is "going on forever". But this is not in line with market logic. In a globalized environment, no country's currency has been rising or falling, even if the US dollar can not be achieved.

From this perspective RMB The trend of rise and fall will be rational. The reform of the RMB exchange rate formation mechanism is not only deepening but also accelerating, and the rise and fall of the RMB exchange rate under market oriented will become normal. This normality itself is the correction of the idea of "gambling on the rise" of the renminbi, and of course, some international speculators will pay the price. The depreciation of the renminbi can squeeze out the hot money coming in. Of course, the two-way fluctuation of the RMB exchange rate may also hurt Chinese enterprises. However, the marketization of RMB interest rate and the market oriented exchange rate formation mechanism are good for Chinese enterprises in the long run.

　　 Orderly management The financial system, of course, helps to isolate external risks, but lacks market experience and will not have market competitiveness. More importantly, the financial system in the management of besieged cities has also accumulated too many risks and contradictions, and these problems have been obscure at the high speed of economic development. However, under the pressure of economic downturn, economic adjustment will have to digest these risks and contradictions.

Huge local debts, emerging trust defaults and the recent default of super Japanese debt have exposed systemic risks associated with the financial system and the property bubble. There is a total lack of risk awareness. It is not advisable to think that all debts and default risks may be paid by the state.

Internally, the RMB interest rate liberalization and exchange rate formation mechanism have been solved, with a timetable and a road map. The trend of reform is irresistible. The recent fluctuation of the RMB exchange rate has sent a signal. In addition, the redemption of liquidity injected by the central bank is not sustainable, and bank bankruptcy has also been put on the legislative agenda. Not only to the big banks, but also early to the depositors knocked a market risk warning bell. Under the pressure of Internet finance, the interest rate liberalization will not change.

The global economy, including the US and Europe, should not expect to push the appreciation of the renminbi through trade barriers. Facing the marketization of China's RMB exchange rate, China's western trading partners urgently need to get out of the logic of confusion and contradiction, accusing China of intervening the RMB exchange rate and forcing the Chinese government to let the renminbi appreciate.

The good and bad economy of China has triggered a lasting discussion around the world, and the appreciation and depreciation of the renminbi has attracted worldwide attention. This means that the world is inseparable from China and cannot be separated from the renminbi.